• Bloomberg reported that Indonesia’s competition commission, known locally as KPPU, is progressing investigation into cooking oil cartel practices by filing documents for a preliminary examination hearing. Two pieces of evidence were found, which allowed the commission to proceed to the next step. The KPPU team will then evaluate the outcome and prepare a report to be read by the prosecution investigator at the hearing. As many as 27 companies were reported to the commission for allegedly breaching the competition law. These include PT Wilmar Nabati Indonesia, PT Musim Mas and PT SMART.

• According to Bloomberg also, Indonesia has begun road tests for the B40 biodiesel mandate. Twelve vehicles will drive up to 50,000km around Java Island to test B40. The test is expected to be completed by year-end.

• S&P Global Platts quoted sources as saying that Indonesia’s palm exports are expected to be 1.8mil tonnes in June and between 2.2mil and 2.8mil tonnes in July. An industry expert said that key players’ estimates remain varied over how much downside is left in CPO prices due to the huge stockpiles in Indonesia. Another source said that factories are running out of space to store the oil and some palm oil makers are using floating tanks or barges near the ports. An industry player in Malaysia said that he is expecting a large inflow of cargoes from Indonesia. He added that about 120,000 tonnes of Indonesian palm oil will make its way to Malaysia in July and August.

• Reuters quoted Indonesia’s trade minister as saying that Indonesia is considering removing a domestic sales requirement (DMO) for palm oil exports because high inventories have been holding back a recovery in prices. Zulkifli Hasan said that previous policies such as a temporary removal of an export levy and larger export quota had failed to quash stocks quickly. He added that although Jakarta is considering removing the DMO requirement, he wants assurances from the refineries. We believe that the assurances are in respect of ensuring that there is adequate supply of cooking oil for the domestic market.

• According to Reuters also, China’s soybean imports from Brazil fell in June while shipments from the US increased as high prices curbed demand for South American cargoes. China imported 7.2mil tonnes of soybeans from Brazil in June vs. 10.5mil tonnes a year earlier. Shipments from the US rose by 54,806 tonnes YoY to 773,114 tonnes in June 2022. Chinese buyers turned to US soybeans for better profits during the peak Brazilian season as bad weather had pushed up prices in the South American country.

• World Grain reported that although global fertiliser prices have stabilised or eased slightly in the 5 months since Russia invaded Ukraine, they are still higher than 2021. Hence producers, who buy early to begin planting in 2023F, will not enjoy savings that they did last year. According to a research undertaken by the University of Illinois, from July 2021 to July 2022, ammonia prices jumped to US$1,469/tonne from US$726/tonne, phosphate went up to US$983/tonne from US$688/tonne and potash surged to US$862/tonne from US$481/tonne. The research report said that the good news is that fertiliser supplies for the western hemisphere in 2022E/2023F appear to be adequate.

Source: AmInvest Research - 1 Aug 2022